Management

Board

Rules of Operation

The Company’s Management Board consists of one to six persons, including the President and Vice-Presidents. Management Board members are appointed for a joint term of office lasting three years, except for the first term of office that lasted two years.

Individual Management Board members and the entire Management Board are appointed and dismissed by the Supervisory Board. Each Management Board member may be dismissed or suspended by the Supervisory Board or General Meeting.

The Management Board handles the Company’s affairs and represents the Company in all court and out-of-court activities. All issues connected with managing the Company’s affairs not restricted by any legal regulations or the Company’s Articles of Associations as a power of the General Meeting or the Supervisory Board fall within the powers of the Management Board.

The Company’s Management Board operates on the basis of the Commercial Company Code and other legal regulations, the Company’s Articles of Association and the Bylaws of the Management Board of TAURON Polska Energia Spółka Akcyjna with its registered office in Katowice that are available on the Company’s website. While performing their obligations, Management Board members follow the Best Practices.

Cooperation of two Management Board members or one Management Board member jointly with a commercial proxy is required to make declarations on the Company’s behalf. Should the Management Board consist of a single person, a Management Board member or commercial proxy shall be entitled to make declarations on the Company’s behalf.

Management Board meetings are convened by the President or a Vice-President who has been asked to do so by the President. Management Board meetings are also convened upon a motion submitted by a majority of Vice-Presidents or the Supervisory Board Chairman. Meetings take place in the Company’s premises on the date set by the person convening the meeting. In justified cases, Management Board meetings may take place outside the Company’s registered office. The President or the designated Vice-President presides over Management Board meetings.

The Management Board votes in an open ballot. Voting results are recorded in the minutes of the meeting. The President orders a secret ballot at the request of any single Vice-President.

Management Board resolutions are adopted by an absolute majority of votes in the presence of 3/5 of the Management Board members. In case of a tie, the President casts the prevailing vote. The Management Board may pass resolutions by circulation or by means of direct remote communication. The method of voting is determined by the President or the designated Vice-President, defining the deadline for Management Board members to vote. Dissenting opinions may be submitted and are recorded in the minutes together with their justification. Management Board decisions regulating business as usual that do not require a resolution are merely recorded in the minutes.

Whenever the number of Vice-Presidents is smaller than the number of Divisions, Vice-Presidents may combine responsibilities in two divisions, or distribute their powers in any other way that is compliant with the distribution of responsibilities adopted by the Supervisory Board.

The President’s scope of activities covers powers concerning the operations of business units reporting to the President’s Division in accordance with the Company’s organisational structure.

The scope of activities of a given Vice-President covers the powers concerning the operations of business units reporting to a given Vice-President’s Division in accordance with the Company’s organisational structure.

The Management Board handles the Company’s affairs and represents the Company in all court and out-of-court activities.

Table no. 2. Powers of the Management Board

Issues requiring a Management Board resolution
as at 31 December 2015 and as at the day of this report

1.

Management Board bylaws,

2.

Company’s organizational regulations,

3.

establishment and liquidation of branches,

4.

appointment of a commercial proxy,

5.

Incurring loans and borrowings,

6.

adopting annual material and financial plans of the Company and the Group, and the Corporate Strategy of the Group,

7.

incurring contingent liabilities within the meaning of the Accounting Actof 29 September 1994, including granting guarantees and sureties and issuing bills of exchange, subject to § 20 section 2 items 4 and 5 of the Company’s Articles of Association,

8.

making donations, redemption of interest or discharge from debt, subject to § 43 section 3 item 1 and 2 of the Company’s Articles of Association,

9.

purchase of real property, perpetual usufruct or shares in property or in perpetual usufruct, subject to § 20 section 2 item 1 of the Company’s Articles of Association,

10.

purchase of fixed assets excluding real property, perpetual usufruct or share in real property or perpetual usufruct, with the value equal to or exceeding the equivalent of EUR 10 thousand in PLN, subject to the provisions of § 20 section 2 item 2 of the Company’s Articles of Association,

11.

disposal of fixed assets including real property, perpetual usufruct or share in real property or perpetual usufruct, with the value equal to or exceeding the equivalent of EUR 10 thousand in PLN, subject to the provisions of § 20 section 2 item 3 of the Company’s Articles of Association,

12.

exercising voting rights at general meetings of companies in which the Company holds shares on the powers of their general meeting, subject to the provisions of § 20 section 3 item 9 of the Company’s Articles of Association,

13.

rules of conducting sponsoring activity,

14.

adoption of the annual plan of sponsoring activity,

15.

issues whose examination the Management Board refers to the Supervisory Board or General Meeting.

Composition of the Management Board as at 31 December 2015

1

Remigiusz Nowakowski

President of the Management Board, responsible for the Division of the President of the Management Board

2

Jarosław Broda

Vice-President of the Management Board responsible for the Division of the Vice-President of the Management Board for Strategy and Development

3

Kamil Kamiński

Vice-President of the Management Board responsible for the Division of the Vice-President of the Management Board for Corporate Affairs

4

Anna Striżyk

Vice-President of the Management Board responsible for the Division of the Vice-President of the Management Board for Economics and Finance

5

Piotr Zawistowski

Vice-President of the Management Board responsible for the Division of the Vice-President of the Management Board for Commercial Affairs

Changes to the composition of the Management Board in 2015 and up to the day of drawing up this report

On 1 January 2015 the Management Board consisted of the following members: Dariusz Lubera (President of the Management Board), Aleksander Grad (Vice-President of the Management Board), Katarzyna Rozenfeld (Vice-President of the Management Board), Stanisław Tokarski (Vice-President of the Management Board) and Krzysztof Zawadzki (Vice-President of the Management Board).

On 1 October 2015, the Supervisory Board dismissed the following persons from the Management Board: Dariusz Lubera – President of the Management Board, Aleksander Grad – Vice-President of the Management Board for Corporate Affairs and Katarzyna Rozenfeld – Vice-President of the Management Board for Commercial Affairs.

On 1 October 2015, the Supervisory Board appointed the following persons to the Management Board: Jerzy Kurella to be the President of the Management Board, Michał Gramatyka as Vice-President of the Management Board for Commercial Affairs and Henryk Borczyk as Vice-President of the Management Board for Corporate Affairs.

On 1 October 2015 the following persons resigned from the Management Board members: Stanisław Tokarski – Vice-President of the Management Board for Strategy and Development and Krzysztof Zawadzki – Vice-President for Economics and Finance.

On 10 October 2015, the Supervisory Board appointed the following persons to the Management Board: Anna Striżyk as Vice-President of the Management Board for Economics and Finance and Piotr Kołodziej as Vice-President of the Management Board for Strategy and Development.

On 8 December 2015, the Supervisory Board dismissed the following persons from the Management Board: Jerzy Kurella – President of the Management Board, Henryk Borczyk – Vice-President of the Management Board, Michał Gramatyka – Vice-President of the Management Board, Piotr Kołodziej – Vice-President of the Management Board.

On 8 December 2015, the Supervisory Board appointed the following persons to the Management Board: Remigiusz Nowakowski as President of the Management Board, Jarosław Broda as Vice-President of the Management Board for Strategy and Development, Kamil Kamiński as Vice-President of the Management Board for Corporate Affairs and Piotr Zawistowski as Vice-President of the Management Board for Commercial Affairs.

On 8 January 2016 the Supervisory Board dismissed Anna Striżyk – Vice-President of the Management Board for Economics and Finance.

On 29 January 2016, the Supervisory Board appointed Marek Wadowski as Vice-President of the Management Board for Economics and Finance.

As of the date of this report, no other changes have been made to the Management Board.

Composition of the Management Board on the date of this report

1

Remigiusz Nowakowski

President of the Management Board, responsible for the Division of the President of the Management Board

2

Jarosław Broda

Vice-President of the Management Board responsible for the Division of the Vice-President of the Management Board for Strategy and Development

3

Kamil Kamiński

Vice-President of the Management Board responsible for the Division of the Vice-President of the Management Board for Corporate Affairs

4

Marek Wadowski

Vice-President of the Management Board responsible for the Division of the Vice-President of the Management Board for Economics and Finance

5

Piotr Zawistowski

Vice-President of the Management Board responsible for the Division of the Vice-President of the Management Board for Commercial Affairs

Executive Compensation of key managers

The executive compensation model for Management Board members consists of two components: fixed compensation (monthly base salary) and variable performance-related compensation. The monthly base salary and the performance criteria for the annual bonus are defined by the Company’s Supervisory Board.

Total gross executive compensation consisting of salary, bonuses and benefits received in cash, in kind or in any other form, due or paid by the Company to the Management Board members in 2015 was PLN 8,024 thousand.

The table below presents the executive compensation of the Management Board members in 2015, by component.